Monday, July 10, 2017

Central bank bars Axiata from repatriation of dividends

The central bank has barred Axiata from repatriating its dividend until the issue of capital gains tax related to the Ncell deal is settled.
Nepal Rastra Bank (NRB) has barred the Malaysia-based foreign investor Axiata from repatriating its dividend, as the tax administration is in the process of taking necessary steps to recover the Capital Gain Tax (CGT). The seller of Ncell – TelaiSonera – has left the country without paying the CGT, which now sems to be the responsibility of the buyer Axiata. The CGT issue has been under discussion in the parliamentary committees, though they have different interpretation on who has to pay the CGT, the buyer or the seller.
The Malaysian telecommunication company Axiata had acquired Ncell’s stake from the Swedish company TeliaSonera last year. TeliaSonera has already repatriated its dividend till fiscal year 2011-12.
According to the share purchase agreement between TeliaSonera and Axiata, the latter will repatriate the dividend after fiscal year 2012-13. Axiata has already submitted a request to the central bank for dividend repatriation. As the custodian of the foreign exchange reserve, the central bank is authorised to issue the final approval for dividend repatriation.
According to central bank officials, Ncell has set aside Rs 72 billion for dividend repatriation for the period between fiscal year 2012-13 to fiscal year 2015-16.
After the central bank's directive, Axiata will not be able to take away dividend until the selling company TeliaSonera clears its tax liability.
According to income tax law, of the 25 per cent applicable CGT in any major deal, it is the responsibility of the acquiring company to directly pay 15 per cent to the government as tax deducted at source and the remaining 10 per cent needs to be filed by the selling company.
Axiata – the buyer of Ncell – has so far filed Rs 23.56 billion in two installments as CGT and has claimed that it has cleared all its tax liabilities.
TeliaSonera – the seller – is accountable to pay the remaining 10 per cent of CGT, it has claimed in a response to the letter from the Large Tax Payers’ Office, that it has met all the tax requirements while operating Ncell between 2008 and 2016.
The central bank has also said no Nepali company or person can transfer funds to firms associated with TeliaSonera as it has not cleared its liability.
The central bank has also flagged other foreign companies including Renold Holdings; St Kitts and Nevis; TeliaSonera UTA, the Netherlands; TeliaSonera Asia Holding, Norway; TeliaSonera Norway Nepal Holding; and SEA Telecom Investment BB, the Netherlands.